The care home sector is on the verge of collapse leaving hundreds of thousands of elderly people at risk of being forced out of their residential homes, the competition watchdog has warned in a “devastating” report.

The Competition and Markets Authority (CMA) said resident fees paid by councils failed to meet care home costs, causing an an unsustainable £1 billion a year shortfall and ramping up prices for those paying for private care.

Private care home residents are being charged 40 per cent higher on average than the amount paid by councils – the equivalent of £12,000 a year – as care homes desperately try to prop up their finances, the watchdog found. As part of its year-long investigation, the CMA said it was taking a number of care homes to court in a clampdown on those charging families for “extended periods” after a resident has died, or demanding unfair upfront fees.

CMA chief executive Andrea Coscelli said: “Care homes provide a vital service to some of the most vulnerable people in society. However, the simple truth is that the system cannot continue to provide the essential care people need with the current level of funding.

“We are now calling on care homes, councils and government bodies to help people navigate what can be a confusing system.”

Andrea Coscelli, Chief Executive, Competition and Markets Authority

“Without substantial reform to the way that councils pay and commission care, and greater confidence that the costs of providing care will be covered, the UK also won’t be able to meet the growing needs of its ageing population.”

The care home sector is worth £15.9bn and covers 430,000 residents in 11,300 homes in the UK. There are over 400,000 care home beds in England, 43 per cent of which are in nursing homes. In Scotland, there are around 42,500 care home beds for the elderly, 59 per cent of which are in nursing homes. Just over half (52 per cent) of the 23,000 care home beds for the elderly in Wales are in nursing homes.

The CMA said while the sector was just about covering its day-to-day costs, it did not have the money to invest for the future. Around 12,000 extra care home beds are needed each year to keep pace with the demands of an ageing population, it said.

Recommendations

As part of its recommendations, it called for an independent body to take charge of care home planning for councils in England and Northern Ireland. The Scottish Government has been advised to make changes including requiring local authorities to provide clear information to prospective residents on how the care system works and their entitlements, and on choosing care homes in the local area.

Mr Coscelli said: “It is essential that residents and their families can make informed choices, understand how these services will be paid for, and be confident they will be fairly treated and able to complain effectively if they have concerns.

“We are now calling on care homes, councils and government bodies to help people navigate what can be a confusing system.”

Caroline Abrahams, charity director at Age UK, called the report “devastating” adding that the sector, which many hundreds of thousands of older people depend on, is “broken and living on borrowed time”.

Better protections

Gillian Guy, chief executive of Citizens Advice, said: “It is good that the CMA has recognised that better protections are needed for older people and their families making decisions about their care – an issue we first raised early last year.

“Whilst the wider challenge around adequate funding for care clearly needs to be addressed to tackle problems in care provision, it is also crucial that work is done to improve people’s experiences of care.

“Our evidence found that missing consumer protections and support in the care home market left people exposed to shock fees and poor practices, including being charged after a resident has passed away – so it is welcome that the CMA is also calling for change.”

“Our evidence found that missing consumer protections and support in the care home market left people exposed to shock fees and poor practices, including being charged after a resident has passed away.”

Gillian Guy, Chief Executive, Citizens Advice

Barbara Keeley MP, shadow minister for social care, said: “The Tory Government needs to act on the resounding verdict of the Competition and Markets Authority and end their swingeing cuts to local authority budgets, which have caused underfunding and instability in the social care sector since 2010.

“Due to these cuts, £6.3 billion will have been lost from social care budgets by March next year. This has meant less publicly funded care for those in need, increased pressure on unpaid family carers and worse conditions for hard-pressed care staff.

“The Tory Government must now make clear how they will enact the will of the House of Commons to meet the funding gap for social care and act on the recommendations of the CMA so that the rights of self-funders are protected.”

A spokesman for the Department of Health said: “We know the social care sector is under pressure due to our growing ageing population – that’s why we’ve given £2 billion additional funding over the next three years and next summer we will publish plans to reform social care to ensure it is sustainable for the future.

“The Secretary of State has asked the CQC to report regularly on their assessment of the financial stability of the largest and most difficult to replace providers of adult social care.”

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